Application to limit legal professional privilege dismissed in superannuation fund case

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This decision concerned a class action against Colonial First State Investments Ltd (Colonial), as trustee for two superannuation funds (the Funds), in respect of alleged breaches of trustee obligations. Colonial has provided discovery and claimed that legal professional privilege applies to a considerable number of documents. The applicant, Mr Kayler-Thomson, claimed that by reason of his status as a beneficiary of the Funds, and the status of other class members as beneficiaries, any privilege attaching to those documents was a joint privilege. Mr Kayler-Thomson applied for orders requiring Colonial to produce those documents. In dismissing the application, Colvin J addressed three issues.

The first issue was whether the principles as to joint privilege as between trustee and beneficiary are confined to small trusts with few, identifiable beneficiaries who have vested interests.

His Honour found that the authorities did not support the existence of a limitation of this kind. No authority was cited by Colonial in support of the proposition that joint privilege depended upon the size or characteristics of the trust being administered, as distinct from the interest of the beneficiary. His Honour canvassed authorities addressing how the nature of a beneficiary’s interest impacted on the beneficiary’s right to inspect documents and observed (at [64]) that: 

It may be that for parties with a proprietary interest there is a right to access the documents and for parties with a lesser interest the Court will require access to be provided where it is persuaded that it is necessary or appropriate to do so in the exercise of its supervisory jurisdiction.

In any event, his Honour characterised the interest of superannuation members as an equitable proprietary interest, rather than a mere expectancy (c.f. Dixon J’s observations in Shimshon v MLC Nominees Pty Ltd [2020] VSC 640 (Shimshon) at [127]), and concluded this interest was sufficient to found the existence of a joint privilege in legal advice obtained by the trustee in undertaking the management and administration of the statutory trust. 

The second issue was whether a representative applicant in a class action may seek production of discoverable documents on the basis of a joint privilege not held by the representative applicant and to which only some members of the class are entitled.

His Honour observed that the common law right of joint privilege is a personal right and cannot be asserted by an agent or representative of the privilege holder without the authority of the privilege holder. His Honour accepted Colonial’s submission that Mr Kayler-Thomson’s standing as a representative applicant did not confer authority upon him to share in the legal professional privilege that exists as between Colonial and other members of the Funds. To support this finding, his Honour relied on the following key reasons:

• There must be a clear statutory intention to abrogate the common law right of legal professional privilege, and no such intention is expressed in Part IVA of the Federal Court of Australia Act 1976 (Cth).

• Absent circumstances where a settlement is reached, the representative role of the applicant is limited to the conduct of the questions of commonality.

• The representative applicant does not by reason of that capacity acquire the privileges, immunities or other legal characteristics of particular class members.

• The right to assert joint privilege is not of a procedural character such that it might be said to form part of the steps that may be taken in the capacity as a representative applicant.

The third issue was whether, having regard to the nature of the Funds, any of the categories as described related to the management and administration of the Funds by Colonial as trustee, so as to give rise to a joint privilege at all.

His Honour found that none of the categories of documents in respect of which privilege was asserted relate to the administration of the Funds on behalf of Mr Kayler-Thomson personally because the documents were brought into existence before Mr Kayler-Thomson had invested in the relevant products. Accordingly, given the answer to Issue 2, the documents are privileged from production irrespective of whether they relate to the management and administration of the Funds by Colonial as trustee. In obiter, his Honour found that the documents did concern the management and administration of the Funds.

This judgment contributes to the discussion on the nature of superannuation members’ interests, which was considered by Dixon J in Shimshon. Interestingly, Colvin J observed (at [66]) that, in certain respects, the statutory rights of superannuation members have the characteristics of a vested interest. This is because of the ability of members to access the funds by an administrative process in circumstances permitted by the regulations and also because, on death, the balance of the superannuation fund may be directed according to the wishes of the person for whose benefit the funds are held (c.f. Shimshon at [125] where Dixon J found that superannuation members with an interest that remained contingent on the occurrence of a future event did not have a vested interest).

Kayler-Thomson v Colonial First State Investments Ltd (No 2) [2021] FCA 854 

Federal Court of Australia, Colvin J,
27 July 2021

Applicants’ Solicitors: Slater & Gordon;
Respondents’ Solicitors: Herbert Smith Freehills;
Applicants’ Funder: N/A

Austlii Link: Accessible here

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